In recent years, the addition of solar PV installations has witnessed a remarkable surge, solidifying its position as the primary driver of renewable energy capacity growth worldwide. This revelation comes from the latest Renewable Energy Market Update for June 2023, released by the International Energy Agency (IEA).
The report highlights that global solar PV installations experienced a substantial net increase of 220GW in the previous year, marking a noteworthy 35% rise from 2021 figures. However, while renewable energy capacity additions as a whole grew modestly by 13% to nearly 340GW in 2022, solar PV accounted for the lion's share of this expansion.
China and the European Union (EU) emerged as the frontrunners in annual PV capacity growth, contributing over 85% of the overall increase. Although most major markets experienced positive growth in solar PV installations, the United States faced a setback with a 15% decline due to challenges in the supply chain and escalating costs.
Looking ahead, the IEA predicts that solar PV installations will continue their upward trajectory, making up two-thirds of the total renewable capacity additions in the following year. In 2023, solar PV is projected to maintain its dominance as the primary source of global renewable capacity expansion, accounting for an impressive 65% of growth. Distributed applications, including residential and commercial systems, will play a pivotal role in this expansion, encompassing nearly half of the global PV increase. The growth in distributed applications is partly attributed to the global effects of Russia's invasion, which triggered widespread electricity price hikes. Consequently, smaller solar PV systems are becoming increasingly attractive to residential and commercial customers from an economic standpoint.
Anticipating consistent growth, the annual solar PV market is expected to reach approximately 310GW in 2024, representing a notable 7% increase from the previous year. This growth will be propelled by factors such as declining module prices, greater adoption of distributed PV systems, and government policies promoting large-scale deployment. Notable markets such as China, the EU, the United States, and India are all poised to experience higher annual additions in response to these developments.
Furthermore, the IEA has revised its forecast for renewable capacity additions in 2023 and 2024, increasing it by 38% compared to its December 2021 estimation. The revised forecast now stands at around 120GW, a significant boost from the previous estimate of over 80GW. In the EU, residential and commercial solar PV systems are expected to contribute 74% of this increase, with six key markets (Germany, Spain, the Netherlands, France, Italy, and Sweden) accounting for 82% of the rise. The surge in distributed solar PV can be attributed to both the hike in retail electricity prices between 2021 and 2022 and policy changes following Russia's invasion of Ukraine.
In addition to the capacity additions, the manufacturing capacity for all segments of solar PV production is projected to more than double, reaching 1,000GW by 2024. This growth will be primarily driven by China, along with increased supply diversification in the United States, India, and Europe.
The report reveals that in the previous year, global solar PV manufacturing capacity surged by over 70% to reach nearly 450GW, with China responsible for over 95% of the new facilities across the supply chain. In both 2023 and 2024, global solar PV manufacturing capacity is expected to double, with China accounting for over 90% of this increase.
